Editorial: State's Medicaid mess was its own doing

The state has been rightly outed and then roundly criticized for bilking billions of dollars out of the Medicaid system for decades, a practice that both New York and federal officials now recognize must stop.

But how that happens is another matter. The state seems intent on putting a large part of the burden on contract agencies, an unacceptable practice when you consider these agencies are, by and large, much more cost-effective in carrying out services than the state is itself.

The state's manipulation of the Medicaid system was brought to the public's attention by the Poughkeepsie Journal in an investigative series titled "Money Pit/Money Maker." The Journal found that the state was able to overcharge the federal government $15 billion in Medicaid costs in the past two decades.

It's a prime example of a totally unaccountable government run amok. The Journal revealed how inspectors, auditors and other enforcers clearly were not doing their jobs.

The state has been receiving an inflated Medicaid reimbursement rate - in some cases four times the national average - to provide care for those in large developmental centers, such as the Wassaic campus of the Taconic Developmental Disabilities Service Office. New York has been using some of the extra money for other services.

Tax dollars for Medicaid are supposed to be used to provide health care to the poor and elderly and enable those with disabilities to get help in institutional settings or group homes. It is a costly proposition even when it is done effectively. And the state has been anything but effective.

The state's reimbursement rate is justifiably being brought back into line and, thus, New York needs to return $1.1 billion in federal revenue. To that end, Gov. Andrew Cuomo's administration has proposed cuts to the nonprofits that provide services and support to individuals with developmental disabilities. This $120 million cut means the state would not be receiving federal matching money, so the actual hit will be $240 million.

There is no doubt, considering the state must rein in its hefty spending on Medicaid, that changes have to be made.

But it should be pointed out that in 2010, a New York Senate Task Force on Government Efficiency found that state staffing costs are "significantly higher than those of voluntary organizations."

The report said, "The State pays higher wages in general and offers more generous benefits. High labor costs divert money way from direct services."

Nonprofit providers agree with that assessment and add that state over-regulation is driving up costs as well.

To be fair, the state Office for People With Developmental Disabilities has faced its own workforce cuts and has been, and continues to be, reorganized under the Cuomo administration.

Cost containment is imperative and, to that end, the state still is scheduled to close the massive Wassaic campus by the end of the year.

The nonprofit sector has to be more accountable, too. A recent report from the federal House Committee on Oversight and Government Reform found that 15 executives at various New York nonprofits primarily financed by Medicaid money each were paid more than $500,000 a year. An additional 100 executives earned more than $200,000 each.

To address this situation, Cuomo has issued an executive order capping executive salaries at $199,000 for most contractors doing business with various state agencies beginning April 1. That change, too, is only fair.

Medicaid spending has taken a tremendous toll on federal, state and county budgets over the years; the system simply must be forced to deliver services more efficiently and with a higher percentage of the dollars going to patient care.

The state caused this mess; it has an obligation to fix it.

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Editorial: State's Medicaid mess was its own doing

The state has been rightly outed and then roundly criticized for bilking billions of dollars out of the Medicaid system for decades, a practice that both New York and federal officials now recognize